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CHAPTER 6

Courage and Moral Leadership

Chapter Outline

Moral Leadership Today

Acting Like a Moral Leader

Becoming a Moral Leader

Servant Leadership

Leading with Courage

In the Lead

Denise Ramos and Jennifer Schiavone, ITT

Adam Grant, Wharton School of the University of Pennsylvania

Paula Reid, U.S Secret Service

Michael Woodford, Olympus

Leader’s Self-Insight

Ethical Maturity

Summary and Interpretation

This chapter explores a number of ideas concerning moral leadership and leadership courage.

People want honest and trustworthy leaders. However, the ethical climate in many organizations

is at a low point. Leaders face pressures that challenge their ability to do the right thing—

pressures to cut costs, increase profits, meet the demands of various stakeholders, and look

Ideas about control versus service between leaders and followers are changing and expanding,

reflected in a continuum of leader–follower relationships. The continuum varies from

authoritarian managers to participative managers to stewardship to servant leadership. Leaders

who operate from the principles of stewardship and servant leadership can help build ethical

organizations.

Your Leadership Challenge

After reading this chapter, you should be able to:

• Combine a rational approach to leadership with a concern for people and ethics.

• Understand how leaders set the ethical tone in organizations and recognize the distinction

between ethical and unethical leadership.

Key Terms

Moral leadership: distinguishing right from wrong and doing right, seeking the just, honest, and

good in the practice of leadership.

Preconventional level: the level of personal moral development in which individuals are

egocentric and concerned with receiving external rewards and avoiding punishments.

Conventional level: the level of personal moral development in which people learn to conform

to the expectations of good behavior as defined by colleagues, family, friends, and society.

Postconventional level (sometimes called the principled level): the level of personal moral

development in which leaders are guided by an internalized set of principles universally

recognized as right or wrong.

Introduction

By the time she was shot in the head in an assassination attempt by Taliban gunmen in October

2012, 14-year-old Malala Yousafzai had been a leader in the fight for girls’ education in Pakistan

for more than three years. Yousafzai began writing a blog under a pseudonym for the BBC at the

age of 11, detailing her life under Taliban rule, their control of the Swat Valley, and her

advocacy of education for girls. After the Pakistan military ousted the militants from her region,

Malala Yousafzai’s story illustrates that real leadership has less to do with making use of other

Annotated Lecture/Outline

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Leadership Challenge #1: Combine a rational approach to leadership with a concern for people

and ethics.

I. Moral Leadership Today

The names of once-revered corporations such as AIG, Lehman Brothers, Bear Stearns, and

Countrywide have become synonymous with greed, deceit, arrogance, or lack of moral

conscience. Although the high-profile stories of ethical misconduct in organizations have slowed

a bit, there are plenty of leaders still on the hot seat because of immoral or unethical behavior:

• Brian Dunn of Best Buy and Mark Hurd of Hewlett-Packard both resigned under pressure

A. The Ethical Climate in Business

Leaders face many pressures that challenge their ability to do the right thing. The most

dangerous obstacles for leaders are personal weakness and self-interest rather than full-scale

corruption. Pressures to cut costs, increase profits, meet the demands of vendors or business

partners, and look successful can all contribute to ethical lapses.

New Leader Action Memo: As a leader, you can put ethical values into action and set the

example you want followers to live by. You can resist pressures to act unethically just to avoid

criticism or achieve short-term gains.

Discussion Question #1: What are some pressures you face as a student that challenge your

ability to do the right thing? Do you expect to face more or fewer pressures as a leader? Discuss

what some of these pressures might be.

Notes_________________________________________________________________________

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Leadership Challenge #2: Understand how leaders set the ethical tone in organizations and

recognize the distinction between ethical and unethical leadership.

B. Leaders Set the Ethical Tone

Top leaders in particular are facing closer scrutiny because what goes on at the top sets the

standard for the rest of the organization. In a study of Fortune 100 companies, fully 40

percent were found to have been engaged in activities that could be considered unethical.

In the Lead: Denise Ramos and Jennifer Schiavone, ITT

ITT, a diversified global industrial corporation, was founded in the early twentieth century, but

when the corporation spun off its defense and water businesses in October 2011, it essentially

became a “100-year-old startup,” as chief communications officer Jennifer Schiavone puts it.

Many companies would start building the brand by taking an external approach, but Schiavone’s

team and new CEO Denise Ramos took the opposite approach—building the company’s

reputation from the inside out with a culture of trust, engagement, and integrity.

New Leader Action Memo: Go to Leader’s Self-Insight 6.1 and complete the questions to learn

whether your behavior and decisions suggest the you will be an ethical leader.

Exhibit 6.1: Comparing Unethical Versus Ethical Leadership

Exhibit 6.1 compares ethical and unethical leadership:

• The behaviors listed in column 1 contribute to an organizational climate of trust,

fairness, and doing the right thing.

• Column 2 lists the opposite behaviors, which contribute to a climate ripe for ethical and

legal abuses.

Ethical leaders aren’t preoccupied with their own importance. They keep the focus on

employees, customers, and the greater good rather than taking every opportunity to satisfy

their self-interest, feed their greed, or nourish their egos. Unethical leaders typically pay more

attention to gaining benefits for themselves rather than for the company or the larger society.

Discussion Question #5: If you were in a position as a student similar to Mike McQueary at

Pennsylvania State University, what do you think you would do? Why?

Notes_________________________________________________________________________

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Discussion Question #8: Leaders at several organizations, including Hostess Brands (Twinkies),

Sbarro, and Blockbuster, have gotten significant raises or bonuses shortly before the firms filed

Notes_________________________________________________________________________

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II. Acting Like a Moral Leader

Companies that get into ethical trouble typically have top leaders who make quarterly earnings

and the share price their primary purpose of business and the most important measure of

individual and organizational success. When leaders forget that business is about values and not

New Leader Action Memo: As a leader, you can drive fear out of the organization so that

followers feel comfortable reporting problems or ethical abuses. You can establish clear ethics

policies, reward ethical conduct, and show zero tolerance for violations.

Despite the corporate realities of greed, competition, and the drive to achieve goals and profits,

leaders can act based on moral values and encourage others to develop and use moral values and

Exhibit 6.2: How to Act Like a Moral Leader

Exhibit 6.2 lists some specific ways leaders act to build an environment that allows and

encourages people to behave ethically. Leaders create organizational systems and policies that

support ethical behavior, such as creating open-door policies that encourage people to talk about

Exhibit 6.3: More Than Wheels Core Value

Exhibit 6.3 lists the core values for More Than Wheels, which has a mission “To help struggling

individuals & families break the cycle of poor financial decision making by using the car buying

process to catalyze lasting change, financial stability and control.” Leaders articulate and uphold

high ethical standards, and they behave morally even if they think no one is looking.

Discussion Question #9: Do you agree that it is important for leaders to do the right thing even

if no one will ever know about it? Why or why not?

Notes_________________________________________________________________________

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Leadership Challenge #4: Know and use mechanisms that enhance an ethical organizational

culture.

III. Becoming a Moral Leader

All leadership practices can be used for good or evil and thus have a moral dimension. Leaders

choose whether to act from selfishness and greed to diminish others, or to behave in ways that

Leadership Challenge #3: Recognize your own stage of moral development and ways to

accelerate your moral maturation.

Leaders most often know what is right; the question becomes how they choose to act on it and

Exhibit 6.4: Three Levels of Personal Moral Development

Exhibit 6.4 shows a simplified illustration of one model of personal moral development.

At the preconventional level, individuals are egocentric and concerned with receiving external

rewards and avoiding punishments. They obey authority and follow rules to avoid detrimental

At level two, the conventional level, people learn to conform to the expectations of good

behavior as defined by colleagues, family, friends, and society. People at this level follow the

rules, norms, and values in the corporate culture. If the rules are to not steal, cheat, make false

At the postconventional level, sometimes called the principled level, leaders are guided by an

internalized set of principles universally recognized as just and right. People at this level may

even disobey rules or laws that violate these principles. These internalized values become more

important than the expectations of other people in the organization or community.

Discussion Question #2: If most adults are at a conventional level of moral development, what

does this mean for their potential for moral leadership?

Notes_________________________________________________________________________

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IV. Servant Leadership

Much of the thinking about leadership today implies that moral leadership involves turning

Exhibit 6.5: Changing Leader Focus from Self to Others

Exhibit 6.5 illustrates a continuum of leadership thinking and practice:

• In the first stage, subordinates are passive—not expected to think for themselves but

simply to do as they are told.

A. Authoritarian Management

The traditional understanding of leadership is that leaders are good managers who direct and

control their people. Followers are obedient subordinates who follow orders. Power, purpose,

and privilege reside with those at the top of the organization. Organizational stability and

B. Participative Management

Since the 1980s, many organizations have made efforts to actively involve employees.

Leaders have increased employee participation through employee suggestion programs,

participation groups, and quality circles. Studies indicate that around 70 percent of the largest

Discussion Question #7: If it is immoral to prevent those around you from growing to their

fullest potential, are you being moral?

Notes_________________________________________________________________________

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Leadership Challenge #5: Apply the principles of stewardship and servant leadership.

C. Stewardship

Stewardship means that leaders are guardians and curators of organizational resources and

values and they place the long-term interests of the organization first. As stewards, leaders

empower followers to make decisions and have control over how they do their own jobs. Four

principles provide the framework for stewardship:

• Adopt a partnership mindset. Partnership can happen only when power and control shift

away from formal leaders to core employees.

• Give decision-making power and the authority to act to those closest to the work and

the customer. This means reintegrating the “managing” and the “doing” of work, so that

everyone becomes a leader and is also doing some of the core work of the organization.

o Nobody gets paid simply to plan and manage the work of others.

• Tie rewards to contributions rather than formal positions. With stewardship, everyone’s

fortunes are connected to the success of the enterprise.

New Leader Action Memo: As a leader, you can apply the principles of stewardship and treat

followers as true partners by sharing power and authority for setting goals, making decisions,

and maintaining control over their own work and performance.

Stewardship leaders guide the organization without dominating it and facilitate followers

without controlling them. Stewardship gives followers a chance to use their minds, bodies,

and spirits on the job, thereby allowing them to be whole human beings.

D. The Servant Leader

Servant leadership takes stewardship assumptions about leaders and followers one step

New Leader Action Memo: As a leader, you can put the needs, interests, and goals of others

above your own and use your personal gifts to help others achieve their potential. The

Servant leadership was first described by Robert Greenleaf in his book, Servant Leadership.

There are four basic precepts in Greenleaf’s model:

• Put service before self-interest. In this view, the organization exists as much to provide

meaningful work to the person as the person exists to perform work for the

organization.

• Listen first to affirm others. One of the servant leader’s greatest gift to others is listening

authentically.

In the Lead: Adam Grant, Wharton School of the University of Pennsylvania

Adam Grant has been studying the power of service to others since he was an undergraduate

student at Harvard. He took a job selling advertisements for a travel guide series but didn’t do so

well. Only when he met another student and learned that her job at the same company was

Leaders care how employees feel about themselves, about their work, and about the people

they interact with. They instill a sense of dignity, responsibility, and meaningfulness in menial

tasks.

Discussion Question #6: Should serving others be placed at a higher moral level than serving

oneself? Discuss.

Notes_________________________________________________________________________

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Leadership Challenge #6: Recognize courage in others and unlock your own potential to live

and act courageously.

V. Leading with Courage

Leaders sometimes have to reach deep within themselves to find the courage and strength of

character to resist temptation, behave morally, or to stand up for ethical principles when others

A. What Is Courage?

Courage is both a moral and a practical matter for leaders. Courage is the mental and moral

strength to engage in, persevere through, and withstand danger, difficulty, or fear.

CONSIDER THIS: Is it Worth the Risk?

To laugh … is to risk appearing the fool.

To weep … is to risk appearing sentimental.

To reach out … is to risk involvement.

To expose feelings … is to risk exposing your true self.

But risks must be taken, because the greatest hazard in life is to risk nothing. Those who risk

nothing do nothing and have nothing.

Many times it isn’t fear as an actual threat that holds people back, but rather F.E.A.R., which

stands for False Evidence Appearing Real. This kind of “fear” arises not from a true threat but

from our own thoughts. This type of fear might be better termed anxiety.

Courage Means Accepting Responsibility

Leaders make a real difference in the world when they are willing to step up and take personal

Courage Often Means Nonconformity

Leadership courage means going against the grain, breaking traditions, reducing

boundaries, and initiating change. Leaders are willing to take risks for a larger, ethical

purpose, and they encourage others to do so.

In the Lead: Paula Reid, U.S. Secret Service

Prostitution is legal in Cartagena, Colombia, but when a U.S. Secret Service agent allegedly

refused to pay, it set off a scandal that got several agents fired and tarnished the agency’s

reputation. Paula Reid, the new supervising manager for the Miami office of the U.S. Secret

Most leaders initiating change find some cooperation and support, but they also encounter

resistance, rejection, loneliness, and even ridicule. It’s often easier to stay with what is

familiar, even if it will lead to certain failure, than to initiate bold change.

Courage Means Pushing Beyond the Comfort Zone

To take a chance and improve things means leaders have to push beyond their comfort

zone. When people go beyond the comfort zone, they encounter an invisible “wall of fear.”

Facing the invisible wall of fear is when courage is needed the most.

New Leader Action Memo: As a leader, you can develop the backbone to accept personal

Courage Means Asking for What You Want and Saying What You Think

Leaders have to speak out to influence others. The Abilene Paradox is the name Jerry

Harvey, author and scholar, uses to describe the tendency of people to not voice their true

thoughts because they want to please others.

New Leader Action Memo: You can assess your level of leadership courage by completing the

exercise in Leader’s Self-Insight 6.3.

Courage Means Fighting for What You Believe

Discussion Question #3: How might understanding the difference between “fear” and “F.E.A.R.,” as

described in the chapter, make you a better leader? Can you name an example from your own life of

“false evidence appearing real”?

Notes_________________________________________________________________________

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B. How Does Courage Apply to Moral Leadership?

There are many people working in organizations who have the courage to be unconventional,

Acting Like a Moral Leader Requires Personal Courage

To practice moral leadership, leaders have to know themselves, understand their strengths

Opposing Unethical Conduct Requires Courage

Whistleblowing means employee disclosure of illegal, immoral, or unethical practices in

the organization. It is highly risky for employees to blow the whistle because they may lose

their jobs, be ostracized by coworkers, or be transferred to undesirable positions. Most

In the Lead: Michael Woodford, Olympus

Michael Woodford had been with camera maker Olympus for 30 years when he was named

president and CEO in early 2011. That appointment turned out to be the end of his career

with the company as well.

Discussion Question #10: A consultant recently argued that the emphasis on corporate governance

and social responsibility has distracted leaders from key business issues such as serving customers and

beating competitors. Do you agree? Should leaders put business issues first or ethical issues first?

Notes_________________________________________________________________________

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C. Finding Personal Courage

All people have can live and act courageously. There are a number of ways leaders can unlock

New Leader Action Memo: As a leader, you can find your personal courage by committing to

something you deeply believe in. You can welcome potential failure as a means of growth and

development and build bonds of caring and mutual support with family, friends, and colleagues

to reduce fear.

Believing in a Higher Purpose

Draw Strength from Others

Caring about others and having their support is a source of courage in a topsy-turvy world.

Support for this proposition comes from studies of the civil right movement in the

Southern United States.

evidence that social media actually reduces strong ties (deep personal connections),

making it harder for people to express courage when they need it.

Harness Frustration and Anger

Anger, in moderate amounts, is a healthy emotion that provides energy to move forward.

The challenge is to harness anger and use it appropriately.

Take Small Steps

In most cases within organizations, finding courage is a deliberate act rather than an

instantaneous response. Courage can be thought of as a decision-making skill that is

Discussion Question #4: One finding is that when leaders are under stress so that fear and risk

increase, they tend to revert to an authoritarian, command-and-control style. As a leader, how

might you find the courage to resist this tendency?

Notes_________________________________________________________________________

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Discussion Questions

1. What are some pressures you face as a student that challenge your ability to do the right

thing? Do you expect to face more or fewer pressures as a leader? Discuss what some of

these pressures might be.

Students can share their experiences as students with the class. One challenge is that of

honesty in the age of internet courses. Because students work from home or office on

2. If most adults are at a conventional level of moral development, what does this mean for

their potential for moral leadership?

Adults who reach the conventional stage of moral development tend to conform to social

trends and follow what is defined by the collective society and individuals around them. In

this stage, if deceit and cheating are the norm, then these adults will follow the trend without

3. How might understanding the difference between “fear” and “F.E.A.R.,” as described in

the chapter, make you a better leader? Can you name an example from your own life of

“false evidence appearing real”?

Students’ answers will vary. F.E.A.R., which stands for “false evidence appearing real,”

arises not from a true threat but from people’s own thoughts. This type of fear might be

4. One finding is that when leaders are under stress so that fear and risk increase, they tend to

revert to an authoritarian, command-and-control style. As a leader, how might you find the

courage to resist this tendency?

Students’ answers will vary. Some of them may say that leaders under stress should remind

themselves that authoritarian management style gives no chance to the employees to voice

5. If you were in a position as a student similar to Mike McQueary at Pennsylvania State

University, what do you think you would do? Why?

Students’ answers will vary. Some students may feel McQueary was right in not reporting as

there are risks involved in whistleblowing. There may also be others who may say that it

6. Should serving others be placed at a higher moral level than serving oneself? Discuss.

Leaders who care for others more than they care for themselves tend to have dedicated and

loyal followers and are better known across the organization. According to the concept of

7. If it is immoral to prevent those around you from growing to their fullest potential, are you

being moral?

Preventing people around oneself from growing to their fullest potential is not a moral thing

to do. It is the moral responsibility of leaders to speak out to influence others. If there are

8. Leaders at several organizations, including Hostess Brands (Twinkies), Sbarro, and

Blockbuster, have gotten significant raises or bonuses shortly before the firms filed for

bankruptcy. The companies have argued that it was a necessary step to keep managers

during a difficult time. Do you think this is a legitimate argument from an ethical

standpoint? Discuss.